As high-end automakers roll out more entry-level offerings, the line between less expensive and cheap is becoming ever thinner

Originally published: August 15, 2014

SMALL

MEDIUM

LARGE

Surely it is some sign of the apocalypse — the four horsemen literally galloping toward the precipice — that Maserati recently felt the need to announce that it would limit its worldwide annual sales to just 75,000 units. As signs that something is wrong in the cosmos, indications don’t get much more blunt: manufacturers of Italian exotics are supposed to be perennially on the verge of bankruptcy, their dedication to the purity of sports cars to the detriment of profit part of their desirability. The concept of efficient — and successful — Italian production somehow lessens the romance.

Nor is Maserati the only purveyor of things loud and red riding a wave of popularity. Ferrari, also Fiat owned, recently announced an annual production limit, albeit one much more boutique like with the stipulation that no more than 7,000 supercars would emanate from Maranello this year wearing a prancing horse. As a fan, I am delighted by its success. Nonetheless, that two Italian auto marques, traditionally slavishly devoted to serving the ultra-rich should suddenly find themselves with too many customers is surely a sign of something going terribly right.

I suppose, were I a political pundit, I would lament yet further indication of the rampant income inequality strangling the worldwide workforce. We are constantly being bombarded with news that the American middle class’s real-world income has stagnated over the last few decades, while the 1% at the top of the food chain have enjoyed riches that even pharaohs could only dream about.

And, of course, there is validity to that argument. All manner of perennially struggling luxury marques — Bentley, Rolls-Royce, Aston Martin, Lamborghini and, yes, Ferrari and Maserati — are booming, at least in part because the rich keep getting richer while we, the proletariat drive around in rust-bucket Cavaliers.

But, so, too, has the definition of what constitutes a luxury car changed dramatically from when only the independently foolish could afford to drive a Mercedes or a BMW. Just this week Bloomberg Business pointed to the pitfalls of any luxury marque that takes its brand awareness for granted. Author Mark Clothier suggests that carmakers “risk hurting their brands as they pursue new buyers” while also pointing out that “the line between less expensive and cheap is thin.”

The article, headlined “The Downside of Low-End Luxury“, points to this democratization of the luxury automobile. Clothier specifically points out Mercedes-Benz’s tremendous initial success with its budget-priced CLA — Steve Cannon, the head of Mercedes USA, says, “the bottom line, it’s our hottest car” — and Audi’s subsequent outpacing of even that success, all the while wondering whether it’s worth it for carmakers to put their brand on the line.

The Mercedes-Benz CLA sedan features sexy coupe styling which helps it stand out from the other cars in this class.Russell Purcell, Driving

Of course, for now, car company executives will tell you it’s a no-brainer. Luxury brand sales are forecast to rise 15% by 2018 — to a whopping 11.6% of the total American market — while sales of more pedestrian autos are predicted to stagnate.

Nor are the German mid-luxury marques the only ones marching relentlessly downscale. Aston Martin’s (relatively) inexpensive US$104,000 Vantage GT was recently tested, Ferrari’s sales skyrocketed when it pumped out the California (a budget-minded convertible that is also more user-friendly), and Maserati’s future success — from the 15,400 delivered in 2013 to that 75,000 limit in 2018 — is predicated on selling a boatload of Ghiblis based on the decidedly proletarian Chrysler 300. Even mighty Rolls-Royce survives on the sales its lesser Ghost, based on the (for Rolls only) downscale BMW 7 Series.

The problem with decrying this proletarianization of the luxury car is that it works so well. Automotive pundits have lamented this slide in brand identity for a decade or more, pointing to the possible hollowing out of brands, only to watch the very brands they cast as desperate fill their coffers with upper-middle-class booty. Not only was the Cayenne not the demise of Porsche, but it actually turned out to be the saviour of the aficionados’ precious 911, the profits from the work-horse SUV allowing the further development of the classic sports car (not to mention the 918 supercar).

Time will, of course, determine whether this success plays out in the long run. So far only the Acura and Jaguar brands have been seriously hurt by pandering to the desires of the many (Honda’s luxury arm is still working on securing a flagship that resonates, Jaguar is finally making a comeback), but with BMW set to unveil a front-wheel-drive car (so far, all the company’s front drivers have been branded Mini), the lower limits of what constitutes a luxury car are sure to be tested further.